One year ago, President Abdul Fattah al-Sisi hosted the Egypt Economic Development Conference (EEDC), a landmark investor forum at which his government, led by then Prime Minister Ibrahim Mehleb, presented a long list of megaprojects with the aim of securing commitments from international investors.

The event was a triumph for Cairo. A long line-up of regional leaders, international statesmen and business leaders declared their support for Egypt, and more than $130bn-worth of agreements were signed to support key projects.

The North African country has made considerable progress over the past year.

But it has failed to meet the high expectations it created among investors and today it finds itself stuck between the proverbial rock and hard place.

Egypt is desperately seeking about $200bn of foreign investment to fund an economic programme that will kick start its recovery after five years in the doldrums.

There is no shortage of challenges facing investors in Egypt – red tape, corruption, lack of legal protection and security fears.

But foreign investors will not put capital into the country so long as currency controls restricting dollar withdrawals remain in place, and while there is the likelihood of a significant devaluation of the Egyptian pound, which would slash the value of their investments.

The Egyptian pound is estimated to be overvalued by 10-20 per cent and most analysts anticipate a devaluation in 2016.

Key project deals cannot be closed due to developer concerns about exposure to potential sharp hikes in the future cost of imported foreign technology.

Investors require either sovereign guarantees that will mitigate their risk, or some certainty about Cairo’s long-term monetary policy that will enable them to price the currency risk into their plans.

But, politically, a devaluation is unpalatable. While devaluing the pound will increase the competitiveness of Egypt’s exports, it will also increase the cost of imports.

The inflationary effect of a devaluation would damage savings and investments in the country at a time when food and fuel subsidy cuts are already driving up the cost of living.

Egypt is stuck between two tough options and the worst thing it can do is to choose neither.

The government has laid out a plan based on large-scale foreign investment and private sector participation. It must stick to the plan.

Cairo should move quickly with a significant currency devaluation to start investment flowing into the country.

And it must support the move with a robust and truthful communications campaign about why tough monetary action is needed to unlock Egypt’s potential.

Richard Thompson